To thrive amid uncertainty, businesses must reimagine their network strategy
Shortages of materials, shipping delays, rising transportation costs and volatile commodity prices have caused ongoing supply chain disruption. By enhancing agility and resilience, businesses can pivot when disruption occurs and move quickly to capture emerging opportunities.
When you work with BDO, you have support from leaders with deep experience leading supply chain transformation at businesses across industries. BDO’s Supply Chain Advisory Team, using their proprietary network optimization tool, can also create different future-state network models so you can choose the best option based on your specific objectives. Whether you want to reduce reliance on one location, optimize and move your current locations, address shrinking operating margins, improve agility or support growth, BDO can help you achieve those goals. We start with an end-to-end review of your supply chain network to identify opportunities to improve resilience, optimize costs and increase service levels. We then help you transform your network footprint to align with the strategic vision for the business and address gaps and opportunities uncovered in the initial analysis.
By revamping your network strategy and supply chain decision-making, you can realize enhancements related to:
Agility and Resilience
Setting Up a Carve-out’s Supply Chain for Success
A $150 million food manufacturer and distributor was recently carved out of a global entity and needed to get its supply chain up and running. Due to the carve-out, the company had to manage every aspect of its supply chain on its own, and it sought to optimize the network footprint to better align with its customer base. The company struggled to service all customers resulting in declining sales figures and increasing operational costs that caused negative cash flow.
BDO performed comprehensive network optimization and warehouse analyses to identify root causes of the problems. BDO professionals then developed and implemented a comprehensive turnaround plan to address the issues and help optimize the supply chain, which included:
- Changing the guiding objective of the company’s supply chain strategy from depot profitability to consistent, quality service for high-value customers.
- Identifying financial savings opportunities and improvements to efficiency, capacity and service levels.
- Redesigning the network strategy to support a new distribution network, including building out e-commerce capabilities, optimizing the mail order home delivery channel and rationalizing the warehouse footprint.
- Providing a warehouse management system (WMS) RFP and implementation of the new chosen system to support fulfillment operations.
As a result of BDO’s assessment and turnaround plan, the client was able to address critical gaps and improve both service levels and profitability.
Key outcomes included:
- Doubled mail order revenue.
- Increased overall capability by 30%-50% at select warehouses.
- Exceeded EBIDTA forecasts by 300%.
- Decreased customer delivery times to two days from eight to nine days.
- Reduction of $7M in operating expenses during transition state of network strategy, with future-state network strategy projected to add $6M–$8M in savings.
- Improved customer service levels for less profitable customer segments via alternative distribution model.
A 150-year-old, $80 million retailer wanted to expand significantly over the next five years and needed to adapt its network strategy to support growth. This objective required expanding its warehouse network to service new stores while maintaining efficiencies.
BDO performed a network analysis and modeled different strategies for expanding warehouse locations alongside store expansion plans. The different network model options were developed using historical demand data, forecasts, customer data, inventory data, store-level data and transportation costs. BDO also created a 5-year financial model that forecast how the new distribution network would impact costs and profit margins.
The result of the analysis was a five-year plan that would add additional warehouses each year as new stores came online, working toward an end-state model that is optimized for the network of stores that will be online at the end of the five-year period. Additionally, with the relocation of two warehouses in the first year, the client was able to reduce $20M in costs, increase warehouse efficiency by almost 30% and reduce labor costs by 10%.
Supporting Expansion for a Retail Company
Redesigning Distribution Capabilities to Support Growth Plans
A $4 billion telecommunications infrastructure company that focused on towers, small cells and fiber solutions needed to adapt its network strategy to align with the future vision for the organization. The supply chain network consisted of 17 distribution centers and 100 local market storage locations, and it had insufficient capabilities to support projected growth of 300% over three years.
BDO performed an end-to-end network assessment and created and implemented a plan to redesign the distribution capability over a multi-year timeframe, including:
- Conducting an RFI and RFP for third-party logistics (3PL) services.
- Working with 3PL to identify, evaluate and design new warehouses.
- Leading contract development and negotiations with respective vendors.
- Leading WMS selection process.
- Developing a training plan to support new network design for back-office and operational stakeholders.
- Designing a local transition plan focused on cleaning up slow-moving or obsolete inventory, ensuring business continuity and enhancing inbound-order planning and management.
The result was a new distribution model with a full suite of new capabilities. The company was able to reduce the number of sites from 17 to eight while maintaining service levels and improving efficiencies. The reduction in locations totaled to over $50M in savings while enabling the company to increase their service levels by 15% across the network. With the addition of the WMS, efficiency at the warehouses increased by over 30% allowing for labor rationalization and additional cost savings.